Belated Notification Penalty has been replaced by the Failure to Notify penalty introduced by Schedule 41 of the Finance Act 2008. The Failure to Notify penalty applies to obligations to notify HMRC of a liability to be registered for VAT on or after 01/04/2010. The Belated Notification Penalty under Section 67 VATA 1994 continues to apply to obligations to notify a liability to be registered for VAT before 01/04/2010.

Please see the Compliance Handbook CH70000 for more details about the new failure to notify penalty.

If the trader’s net tax liability (relevant VAT) is known a penalty assessment should be raised on form VAT 291 or by issuing a penalty assessment letter.

Note: For details of the penalty assessment letters that can be issued see VCP10480.

If the trader is requested to send in a calculation of relevant VAT in a penalty letter, a penalty assessment should be made on a form VAT1.

The penalty assessment should be raised when the trader’s response is received, or no response is received within 30 days of the notification letter.

Penalties are to be calculated and penalty assessments prepared by the officer dealing with the case.

The penalty assessment form VAT 291 should be completed. The assessment must be checked and countersigned by line management.

Where assessments are in the form of a penalty letter the checking officer must make a note on the copy of the letter.

The local copy of the form VAT 291 should be kept in the trader’s folder or via the electronic folder after the details have been input to VALID. The trader’s copy is sent to the VCU with a reply paid envelope.

One month after the issue of the form VAT291 check the ledger display on VISION to ensure the penalty assessment has gone on file and note the local penalty record with the action taken.